Baroness Perry urges a clear-up

There seems to be universal agreement that energy efficiency is desirable, offering the prospect of more secure energy supplies and lower emissions. At the G8 in Gleneagles, the leaders of the developed world described it as ‘a key area for G8 action’, and set out a plan to improve the efficiency of buildings, appliances and transport.

But do our leaders really understand energy efficiency? And is the current diverse range of policies and actions, at local, national and international level, really likely to deliver lower energy use and lower emissions? These were the fundamental questions that arose in the year-long inquiry into energy efficiency conducted by the House of Lords Science and Technology Committee.

This was our second inquiry into the emissions reduction strategy contained in the 2003 Energy White Paper. In 2004 we published Renewable Energy: Practicalities, which subjected the nuts and bolts of the Government’s promotion of renewable energy to close analysis. We have now subjected energy efficiency to the same level of scrutiny, with worrying results.

Wasteful buildings

Take buildings, for instance, the source of almost half the UK’s greenhouse gas emissions, served by an industry which employs up to three million people. The latest review of Part L of Building Regulations, which will come into effect in January 2006, is expected to deliver a 25 per cent improvement in energy efficiency in new buildings, and comes on top of the 2002 review which promised a similar improvement.

All this is welcome – although, according to an article in the Guardian on 18 July, the proposed Regulations are now in danger of being watered down.  But even if they are not watered down, Regulations still merely set targets, and it is clear that in reality these targets are not being achieved. Local authority Building Control sections have been largely replaced by private inspectors, who must compete for custom. There are no clear, mandatory ‘pass-fail’ tests for finished buildings, such as pressure tests to ensure air-tightness. Even if buildings do fail to achieve standards, Building Control sections do not have the resources to launch prosecutions, and customers cannot simply get their money back.  There is no ultimate sanction for builders who cut corners.

At the same time, there is an acute skills shortage in the construction industry. The Adult Learning Inspectorate estimate that the sector needs 88,000 new entrants each year—yet the industry is struggling to cope with the 60,000 currently starting out on apprenticeships each year, of whom only a third complete their courses. Builders remain wedded to traditional bricks and mortar, preferring to rely on on-site skills rather than prefabricated parts made to factory tolerances.

Looking into the future, we were dismayed to discover that the Department of Trade and Industry has cut funding for applied construction research by two thirds since 2000, to just £5 million.  This at a time when the Office of the Deputy Prime Minister is looking to the industry to build some two million new houses over the next ten years, and when the government as a whole spends some £25 billion each year on procurement from the construction industry.

Thus there is a huge gap between theory and practice. In theory, building standards are rising and will continue to rise. In practice, the various departments and agencies simply aren’t working together in the effective and co-ordinated way that is needed to deliver these standards.

Behaviour crucial

Another key area is behaviour. Better energy efficiency does not in itself lead to lower energy consumption or lower emissions. If you insulate your walls and loft, but at the same time turn up the thermostat, or perhaps use the savings to help purchase a heated conservatory, you could end up using more, not less energy. There is no doubt that modern cars are far more fuel-efficient than their predecessors, but we own many more of them, and we drive them further, with the result that energy used in transport has more than doubled since 1970.

So influencing behaviour will be essential if improved efficiency is to be translated into lower energy use. We devoted a chapter of our report to exploring behavioural issues, focusing on three broad areas: financial incentives, education and information.

Financial incentives

There is a growing consensus in favour of using financial incentives to encourage people to use less energy. The simplest incentive would be higher energy prices, either across the board, or through a carbon tax that penalised fossil fuels and favoured carbon-free forms of energy such as renewables or nuclear. This would probably work (as it did in the 1970s), but higher prices would fall heavily on industry and on the fuel poor. As a result, various more targeted incentives—stamp duty or Council Tax rebates, for instance, offered in exchange for energy efficiency improvements—have been proposed. More work is needed to assess these options.

If behaviour is to change, it is essential that it should be in the interests of both consumers and suppliers to reduce energy demand. Extension of energy services—long-term contracts by virtue of which suppliers manage energy demand, and are rewarded for savings—will be critical in developing new profit streams for supply companies. In Berlin the city’s Energy Agency grants suppliers 10 or 15-year contracts to manage the energy needs of public buildings: the suppliers invest in improved efficiency, and in return receive 70-90 per cent of any savings made. The programme has delivered major financial and emissions savings.

We also need to think about pricing. At present, the more energy that is used, the less consumers typically pay per unit, creating in effect an incentive to use more energy. In contrast, many parts of the world have experience of ‘lifeline tariffs’, providing a quota of cheap energy sufficient for basic needs, with the price rising thereafter. The same model, particularly in conjunction with the development of energy services, could work in the UK.

Education and information

On education, we saw an impressive scheme at a primary school in Leicester, where a wind turbine has been installed, whose output is monitored by pupils daily. More such schemes are needed. Yet in more general terms, exhortation to use less energy is unlikely to be effective. The provision of better information on actual energy use seemed to the committee to be one of the keys to reducing demand.

At present most of us pay for our energy by direct debit and our meter readings are often estimates—in other words, we only have a very vague sense of how much energy we are using, or of the impact of, say, turning off the lights or lowering the thermostat, on either our pockets or on emissions. But the technology is already available for either ‘remote’ metering (which would put an end to estimated meter readings) or ‘smart’ metering, which could provide cheap wall-mounted display units, allowing consumers to monitor their energy use, and its financial or carbon costs, in real time.

Good quality information can make a dramatic difference. In Gothenburg in Sweden, the municipal housing association invested in software to monitor energy demand and alert staff to aberrations from normal use, with the result that energy demand across 23,500 apartments has been cut by 15 per cent without any change in living conditions for residents. The housing association is saving some £2 million each year, and emissions are down by almost 2,000 tonnes annually.

As an official of Leicester City Council, which has invested in a similar monitoring system, told us, ‘if you can’t measure it, you can’t manage it’. Yet the Government has dragged its feet, with the result the supply companies have no incentive to provide remote metering, and no large-scale trial of remote or smart metering is planned in the UK.

Pointing away from waste

We live in a society where energy is wasted on a huge scale. Some 61 percent of the primary energy that goes into our power stations is lost, mostly dissipated as heat via cooling towers. Of the electricity that is finally delivered to consumers, some 760 million kWh per month, producing over a million tonnes of carbon per annum, is used to power appliances that are on standby or not actually in use.

To change our culture of wastefulness needs strong, imaginative and co-ordinated Government leadership, not the current fragmentation and muddle. We hope our report helps show the way forward.

Read the report here.

Baroness Perry of Southwark chaired the enquiry